Mortgage, housing trades urge CFPB to extend TRID deadline, again

Or at least extend and formalize the grace period

More leading mortgage and housing industry trade groups are asking the Consumer Financial Protection Bureau to push back its effective date for the Know Before You Owe mortgage disclosure rule to the end of the year, or at least extend the grace period.

For now, the CFPB proposes to move the rule’s effective date to Oct. 3, 2015, from its original Aug. 1 date and its subsequent Oct. 1 change.

The rule, also called the TILA-RESPA Integrated Disclosure rule, requires additional mortgage disclosure forms and a more complex compliance apparatus for lenders. The required loan documentation consists of two new forms: the Loan Estimate and the Closing Disclosure to ensure compliance.

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These new forms consolidate the TILA-RESPA forms and are meant to give consumers more time to review the total costs of their mortgage. The Loan Estimate is due to consumers three days after they apply for a loan, and the Closing Disclosure is due to them three days before closing. These two requirements have thrown the mortgage industry into a frenzy as they try to comply by the deadline.

“We also greatly appreciate the CFPB’s extraordinary work in developing the TRID rule itself, which we believe--when finally implemented--will make the mortgage process considerably more understandable and navigable for consumers, an objective we have long shared,” said Pete Mills, Senior Vice President, Residential Policy and Member Services for the Mortgage Bankers Association, in a letter to the CFPB. “Notwithstanding, experience has shown that the TRID rule is far more complicated and wide ranging than any other rule previously issued by the CFPB. It is causing significant implementation challenges which will increase as the process moves forward and the rule becomes effective.

“Accordingly, for the reasons explained in this comment, MBA not only strongly supports this change in the implementation date, but also supports making this effective date the start of a temporary “good faith” implementation and enforcement period,” Mills writes. “During this period, we urge that the rule expressly require that all covered persons implement the rule in good faith beginning October 3 and that the CFPB will examine entities using a “good faith standard” from that date.”

MBA also urged the CFPB to make clear that this period should preclude enforcement by other state and federal regulators and private litigants.

“Following the conclusion of the period—which we believe should span at least six months—the CFPB will commence regular enforcement and examination,” Mills said.

The Credit Union National Associationis asking for a Dec. 31 effective date, rather than Oct. 3.

“We also greatly appreciate the CFPB’s extraordinary work in developing the TRID rule itself, which we believe--when finally implemented--will make the mortgage process considerably more understandable and navigable for consumers, an objective we have long shared,” said Pete Mills?Senior Vice President?Residential Policy and Member Services for the Mortgage Bankers Association, in a letter to the CFPB. “Notwithstanding, experience has shown that the TRID rule is far more complicated and wide ranging than any other rule previously issued by the CFPB. It is causing significant implementation challenges which will increase as the process moves forward and the rule becomes effective.

“Accordingly, for the reasons explained in this comment, MBA not only strongly supports this change in the implementation date, but also supports making this effective date the start of a temporary “good faith” implementation and enforcement period,” Mills writes. “During this period, we urge that the rule expressly require that all covered persons implement the rule in good faith beginning October 3 and that the CFPB will examine entities using a “good faith standard” from that date.”

MBA also urged the CFPB to make clear that this period should preclude enforcement by other state and federal regulators and private litigants.

“Following the conclusion of the period—which we believe should span at least six months—the CFPB will commence regular enforcement and examination,” Mills said.

The National Association of Federal Credit Unions, meanwhile wants the CFPB to formalize an extended grace period for enforcement.

“NAFCU supports delaying the effective date for the TRID Rule to October 3, 2015, and agrees that this extension will benefit both credit unions and consumers by providing for a smoother implementation of the new disclosures. NAFCU, however, remains concerned that the proposal does not provide for an early compliance period,” said NAFCU Director of Regulatory Affairs Alicia Nealon, in a letter to the CFPB.

Nealon also requests in the final rule the CFPB take the opportunity to formally state its intention to consider good-faith efforts to comply with the TRID Rule in its examination procedures.

In addition, Nealon seeks clarification regarding the revised servicing transfer notice and the new escrow cancellation notice. Both notices are scheduled to become effective on Aug. 1, 2015, and the proposal makes no specific reference to these post-consummation notice requirements.

NAFCU generally supports the CFPB’s proposal to delay the effective date of the TRID Rule to October 3, 2015 from August 1, 2015, as the extension will benefit both credit unions and consumers. However, to ensure lenders are prepared for the eventual implementation date, NAFCU strongly urges the Bureau to authorize an early compliance period,” she said.

The Community Home Lenders Association says it would request a hold harmless period through the end of the year for good faith compliance efforts with TRID, which is scheduled to take effect on Oct. 3.

The CHLA letter to the CFPB expressed its appreciation for CFPB’s latest action to delay the TRID implementation date two months and its recent post that it would show “sensitivity” to entities that make good faith efforts to comply with the new TRID requirements.

The CHLA letter went on to say, “However, we also write to suggest that both consumers and industry participants would benefit from a reasonable hold harmless period through January 1, 2016, with more specificity regarding liability protections for lenders and other entities that comply with the new disclosure requirements in good faith.”

CHLA says that such an action would reduce the risk of mortgage loan closing delays, as well as other consumer costs and inconveniences that could result from such delays.

“We note that 250 Members of the House and 41 Senators have written to the CFPB urging this action,” CHLA says.

The National Association of Realtors, which urged the CFPB in May of this year to implement a grace period for those seeking to comply in good faith with the new rules, noted that the August 1 deadline originally set forward came in the midst of the busy summer home buying and selling season and could negatively impact consumers.

“NAR believes CFPB should use this authority and establish a trial implementation period from October 3, 2015 to at least December 31, 2015. During this period lenders and other settlement service providers would be required to use the new forms in good faith but not be bound to hold up transactions should the new forms and rules create glitches,” the group says in an open letter. “Instead, lenders should be required to catalog and report these issues or glitches to the CFPB so the CFPB and industry can work together to improve the rule and ensure a positive consumer experience.”

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Trey Garrison was a Senior Financial Reporter for HousingWire.com. Trey served as real estate editor for the Dallas Business Journal, and was one of the founding editors of D CEO Magazine. He has been an editor for D Magazine — considered among the best city magazines in the United States — and a contributor for Reason magazine.

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